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Prime Minister of Hungary Ferenc Gyurcsany (translation from Hungarion through Russian simultaneous translation): Mr President,

Ladies and Gentlemen,

The winter has been long but the spring has now come. Before 1990, the ties between our countries were characterised by unilateral dependence. After 1990, they were characterised by mistrust – more mistrust than was needed or justified – and this sometimes caused great damage. But since 2002, this mistrust has given way to relations marked by increasing and expanding cooperation. Today this cooperation has already developed into a partnership. We can thank Mr Putin and the Russian government for the fact that this has happened.

Hungary and the Hungarian government had to radically change their behaviour. We had to realise, had to realise mutually, that we will need to understand each other in the future. We have come to this realisation and we have now drawn a line between past and present. And as if to symbolise the moral and spiritual aspect of this turning of the page, the books from the Sarospatak library have been returned to Hungary. This event is of just as great importance as were the return of our historical banners in the middle of last century and the return of our crown many decades ago. That we have drawn a line now between past and present is also evident in that the subjects of our talks today are clearly focused on the future. We have made progress today too, and indeed, more progress than we had even hoped for.

During our talks today, President Putin and I agreed that we would begin work this year on a programme that aims at bringing Russian pipeline gas to Hungary via the south of Europe and turning Hungary into a centre for the distribution of this gas coming from the south. We must be in a position to guarantee the energy security of Hungary and of Europe. We agreed that a logistics and transport development programme would be part of the New Hungary Programme, and we will make maximum effort to ensure that Hungary becomes the transport and logistical hub for the Trans-Siberian railway on the way to the southeast Europe.

President Vladimir Putin: Mr Prime Minister,

Ladies and Gentlemen,

First of all I would like to express our gratitude to the Prime Minister for this warm reception here in Budapest. Before commenting on our talks, I would like to say that we are in great admiration of this building we are in. It is a unique place, a place of simply amazing beauty. Perhaps it is this, and also the sincere friendliness with which we have been received in Hungary, that created such a positive atmosphere for settling issues that are not easy but that are of great importance for both our countries.

Our talks were very substantial and constructive and confirmed fully that the relations between our two countries are developing positively and are expanding in practically all areas.

This is in large part the result of regular political contacts. These contacts have become well established over recent years thanks to the current government and we are grateful to our Hungarian partners for this. I had good relations with the last prime minister, Mr Medgyesy, and I also have good relations with the current leadership.

We have created in our bilateral relations the political atmosphere we need to be able to develop, above all, to be able to increase our economic ties, and this is now bringing results.

We discussed in detail the full spectrum of our bilateral relations today. Our talks centred on implementing the agreements that were reached during the previous meeting with the Hungarian Prime Minister in Moscow in February 2005. We concluded that some very good results have been reached over the last year overall. Progress is particularly notable in the economy, which is the backbone of our cooperation. This positive trend is reflected in our trade growth. Our bilateral trade increased by 52 percent last year and reached the record figure of $6 billion. This certainly reflects the transformation of good political relations into economic results. Hungary’s exports to Russia over this period exceeded $1 billion for the first time.

The renewed activity of the Russian-Hungarian Intergovernmental Commission on Economic Cooperation played an important part in this growth. It held its first meeting last September. During our meeting today the Prime Minister and I agreed that we are ready to transform the commission, and not even transform it in fact so much as give its work a new impulse, and that we will look at the possibility of holding intergovernmental consultations of the kind that Hungary holds with its partners in Europe and that Russia holds with its major partners such as the Federal Republic of Germany, France and Italy.

I am sure that we can work together to expand considerably the horizons of our trade and economic ties and our scientific and technical cooperation.

The fuel and energy sector is a strategic area for cooperation between Russia and Hungary. We reaffirmed our plans to deliver energy supplies to Hungary on the basis of our existing long-term contracts. We are also ready to work together on promising oil and gas and other energy projects.

The Prime Minister mentioned the possibility of building a major gas reservoir on Hungarian territory and supplying Russian pipeline gas to Hungary via new routes – referring here to our multilateral cooperation with the Republic of Turkey and with other countries in southern Europe.

We have already completed the project of laying a gas pipeline across the Black Sea bed to Turkey. Now we are examining the possibility of extending this project into southern Europe. In this context, Hungary’s role and importance in increasing the reliability of Russian energy supplies not just to Hungary itself but also to other countries in Europe, is set to grow. Hungary could certainly become one of Europe’s energy centres and serve as an important base and vital link in energy cooperation on the European continent.

We are also ready to begin work on joint projects in other areas. We discussed in detail investment and other cooperation projects, including between the regions, during our talks today. On our side this includes, for example, the reconstruction of Budapest’s metro system and deliveries of rolling stock. In this respect we plan to work together with our Japanese partners in order to meet the demands of the Hungarian market.

I note also the modernisation of the Paks Nuclear Power Plant and the construction of a railway freight shipment centre in Zahan. This is a serious multilateral project and could give new substance to our cooperation. We could send a sizeable share of goods flows and container shipments from Asia to Europe via the Trans-Siberian railway and on through to Hungary, where a major logistics centre would be created to distribute these goods throughout the countries of Europe.

Hungary is taking part in housing construction programmes under mortgage loan schemes, including the construction of social infrastructure facilities.

The Prime Minister mentioned work in the areas of healthcare and housing construction. Here, we are referring to the creation also of logistics hubs in the Moscow Region and in Yekaterinburg.

Furthermore, we have signed documents outlining our cooperation in the areas of nano-technology, information and communications. You were present for the signature of these accords. This will become one of the driving forces of our future cooperation and will increase the share of high-technology products and services in our trade and economic ties.

I would like to say that the quality of Hungary’s exports to the Russian Federation is very impressive because finished goods account for the bulk of Hungary’s exports and I think that there is much more that we can undertake together in this area.

Let us also not forget about agriculture. We are opening our markets up to agricultural products from Hungary and we will continue working in this way. We have no interest in turning the agricultural land of our partners into hunting grounds, as I already said during my meeting with the President. On the contrary, we want not to just to work together in this area but to help our partners to supply our market with cheap and quality products.

Our talks resulted in the signature of bilateral accords regulating our cooperation in practical areas of cooperation. The signature of the intergovernmental agreements on the status of Russian technical centres in Hungary is significant as a precedent for our relations with a number of other countries in the region. We will also sign an inter-ministerial protocol on education exchanges and a memorandum on immigration issues.

I particularly note the so-called diagonal agreements between ministries and agencies in Hungary and the Russian regions. We place great importance on this kind of regional cooperation. We see it as very promising and we will support Hungary’s business community, its small and medium-sized businesses, by creating the conditions for them to enter the Russian market and work in the Russian economy. This includes the creation of Hungarian logistics centres that will support Hungary’s small and medium-sized enterprises in their work in Russia.

An exchange of letters took place on changing the intergovernmental agreements on the procedures for settling the former Soviet debt to Hungary. We have agreed to our Hungarian partners’ wishes and have replaced the products that it was previously agreed would be delivered as payment of the debt with products that Hungary’s industry and economy need today.

We also had a detailed discussion of current European and international affairs. We had a frank exchange of views and were pleased to note the coincidence of our positions on the fight against new threats and challenges such as international terrorism, proliferation of weapons of mass destruction and the technology for manufacturing such weapons, and the fight against organised crime and illegal immigration.

I want to say once again that both Russia and Hungary have an interest in realising in full the immense potential for partnership and cooperation between the Russian Federation and the European Union, and also for deepening cooperation in the Russia-NATO Council and in other international organisations and bodies. We are grateful to our Hungarian partners for their support for development of relations between Russia and these organisations, above all, for relations with the European Union and NATO.

Humanitarian and cultural ties were an important item on our agenda. You know that the Russian cultural season in Hungary and the Hungarian cultural season in Russia were both successful events and we hope to continue this work. We are ready to provide every kind of support for the development of the Russian language in Hungary. I think that as our trade and economic ties expand, interest in and demand for the Russian language in Hungary will grow.

Together we have managed to resolve a very complex issue that weighed heavy on relations between our two countries for a long time. A collection of books that ended up in Russia after the Second World War is being returned to Hungary. We are very glad that this event has finally taken place. The handover ceremony will take place tomorrow at the National Museum. This event has been made possible by a law specially adopted in the Russian Federation. The Prime Minister and I agreed on this during his visit to Moscow. For legal, political and emotional reasons this was not altogether easy to arrange, but thanks to the Hungarian Prime Minister’s perseverance and flexibility we have seen this through to its completion and we are very happy.

I would like to take this opportunity to note that Soviet war burial sites on Hungarian soil are being properly taken care of. We in Russia appreciate this fact and we show just as much care for the Hungarian memorials that have been erected and opened in our country in recent years.

In conclusion, I would like to thank the Prime Minister for his pragmatic and constructive approach to all the matters and problems we discussed. I am confident that the relations between our two countries will continue their positive development and that we will maintain the pace.

Thank you for your attention.

Question: You spoke a lot about the new stage in relations between our countries and the new opportunities before us. Could you please say a bit more about how you managed to overcome the many problems that previously divided Russia and Hungary and that have their roots in the socialist past we share? This is all the more interesting as relations between some of the other countries formerly in the socialist camp and Russia are still far from being as good as relations between Russia and Hungary. Thank you.

Vladimir Putin: Obviously there are some out there who still feel as if they are living in the camp and this is why it is proving so hard to overcome the legacy of the past because the camp mentality of the past simply gets in the way.

I am very happy to see that the problems of the past are not politicised in Hungary. Hungary is not forgetting the past, but it is trying to overcome this legacy of the past in the interests of the future. We for our part are ready to do exactly the same with regard to Hungary.

I already spoke about the events of 1956 – let us speak frankly about the most difficult moments of the past. I do not think that the Russia of today bears responsibility for the decisions that President Yeltsin condemned in the name of the Russian leadership back in 1992. But we see that the Hungarian people and the Hungarian leadership today are not politicising these difficult periods in our past, are not using them as a platform on which to build up their political muscle on the home front, and are not frightening the public with them or engaging in anti-Russian rhetoric. This creates the moral climate that makes it possible for us to say today that yes, we understand the moral issues involved in the events of 1956 and we are sensitive to them, and respecting the sensitivity of these issues, at the same time, we also want to look to the future and we want to do so together with the Hungarian people.

Ferenc Gyurcsany (translation from Russian simultaneous translation): Both President Putin and myself are part of the generation that was born after the Second World War. We can resolve problems through our strength of will. Either we want to become mired in the past or we want to settle the problems before us. A selfish policy can provide the short-term illusion of stability but in the long run leads only to uncertainty. Russia understands this and is acting accordingly now to build a democratic society. We also understand this and are building our democratic society accordingly, and it is this that forms the foundation of our ties.

Russia understands that there can be no repeat of 1956. This is the past now. President Yeltsin said this in 1992, and President Putin made this even more clear today. I can say the same about Hungary’s past. There is a moral responsibility, but we cannot let this moral responsibility bind us hand and foot. We need to free ourselves from this past and work to build the future. This is what Hungary wants and it is what Russia wants. There is no other way forward. The President of Russia understands this, and the President of Hungary also understands this and says so.

Question: I have a question regarding Iran. What outcome do you hope the negotiating process will produce? Would it be acceptable to you for Iran to enrich uranium on its own soil? If agreements are concluded, then what steps are you willing to take? And a second question: could you say a bit more about the gas pipeline? What can Russia do and what is it willing to do in order to convince Europe that it really is a reliable partner? Thank you.

Vladimir Putin: I do not think that anyone in Europe should have any doubts as to the reliability of Russia’s energy supplies to Europe. Russia has never failed to meet its energy supply commitments, not even during the difficult economic situation in the mid-1990s. All that we have undertaken over these last years is aimed at increasing the reliability with which our suppliers meet their contractual obligations. I have spoken about this on many occasions and can repeat it again now. After fifteen years of negotiations we have finally agreed with our Ukrainian partners to separate the two issues of gas supplies to Ukraine itself and the transit of gas to Europe. It is to the honour of the Ukrainian leadership that President Yushchenko has taken this important step in the interests of his own country and in the interests of Europe. His decision deserves our full support. We will continue to work in just such a serious and responsible fashion with our partners in the future.

At the same time we see that supplies to European consumers are increasing with every passing year. Our contractual obligations will increase by 60 billion cubic metres of gas over the coming years and this will require additional energy supply routes to Europe. One such route is the North European Gas Pipeline that is under construction along the Baltic Sea bed.

Another route is via the south. Part of this project has already been completed. We have completed construction of the Blue Stream pipeline along the Black Sea bed that is capable of delivering 16 billion cubic metres of gas to Turkey a year. We are now looking with our Turkish partners at the possibilities for extending this pipeline system to southern Europe. Our partners in southern Europe – Italy, Austria and some other countries, Greece, for example – are interested in carrying out this project. We think that it would be entirely possible to involve Hungary in this work too. This would not only increase Hungary’s energy security but would also give a new quality to Hungary’s participation in European energy affairs.

Now, coming to Iran: we are optimists and we think that we can reach an agreement with the Iranian negotiators on the creation of a joint enterprise on Russian soil to enrich uranium for Iran’s nuclear energy needs.

Furthermore, we see our proposal made to our Iranian partners as something of a pilot project in that it could lead to the realisation of our initiative to create centres for enriching uranium and processing spent nuclear fuel. Any country without exception, any country wishing to develop nuclear energy, could use the services these centres would provide. This is all the more important as the role of nuclear energy is only set to grow given the limitations on fossil fuels.

If we can convince our Iranian partners that carrying out this plan would be in the national interests of their country and in the interests of the entire international community we will be very happy indeed and will be able to say that we have made a contribution to resolving the situation with Iran’s nuclear programme.

At the same time, however, I want to note that we must not and do not have the right to limit the participation of any country within the framework of the current international law on nuclear energy and we must take different countries’ interests into account. We will not be able to find a long term solution to this problem if we do not take into account the interests of the countries wishing to develop modern technology. But we need to put in place the according infrastructure conditions if we are to resolve this problem. One condition could be the creation of uranium enrichment and spent fuel processing centres. There is a risk present in both activities, after all, of the spread of nuclear technology that can be used to create nuclear weapons. Our initiative, if it is carried out, would minimise this risk. As for the outcome of the negotiations, we will soon see.

Question: Is there anything that could change your mind about creating an energy distribution and railway shipment hub in Hungary?

Vladimir Putin: Yes, there is. I will explain what exactly. The choice of strategic partner in the European energy sector, the choice of strategic partner in the creation of major logistics centres to distribute the huge flow of goods from Asia, if we manage to realise our plans, is a question of great importance and will depend on the political climate in which we will be working. If the climate is friendly, as is the case in Hungary today, then this creates the main condition that is crucial for our success, and that condition is trust. This implies stability and it implies confidence in our partner and confidence that our efforts will not be sacrificed a couple of months or years down the road to imaginary political or ideological considerations.

But in the case of Hungary we have every reason to believe that our relations, the relations we have built up over these last years, really are strategic in nature and that they will remain stable. As far as we can see, there is a certain consensus on the Hungarian political stage with regard to building relations between our two countries. Practically all the political parties support the development of Russian-Hungarian cooperation. It is this that creates the necessary political conditions for developing our trade and economic ties.